Local businesses fight Amazon on sales tax

Amazon seeks ballot referendum to reverse new state law

By Sue Dremann

Embarcadero Media

Local brick-and-mortar businesses that pay sales taxes are protesting's attempts to get an exemption for Internet sales it conducts in California.

A coalition of small businesses from Menlo Park and Palo Alto planned to hold a press conference Wednesday (Aug. 17) to address the issue. Amazon is trying to repeal a state law through a ballot referendum that requires retailers with a physical presence in the state to collect sales tax.

Amazon has spent a reported $3 million to try to overturn the law, which state lawmakers approved in June to expand sales-tax collection to more Internet retailers. It is estimated the revenue would bring the cash-strapped state an additional $200 million annually.

Amazon also stopped associating with California businesses that sell books through its website because they have a physical presence -- a nexus -- that would make the online retailer have to pay sales tax under law.

But business owners, including Clark Kepler of Kepler's bookstore, are opposed to Amazon's attempts to change the law. They argue that an exemption creates an unfair advantage for the Internet giant.

In addition, sales tax revenues help pay for local road and infrastructure repairs that have been cut back because of the state deficit.

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